Budget 2011 – Less bang for your buckPosted by Alexander Hay
Will the boy George deliver the goods?
To begin with, there is the rise in the tax threshold. This has been something of a hobby horse for Tory, and indeed Lib Dem, theorists for a long time, and so Chancellor George Osborne was always going to raise it as much as possible.
So far, so good. But to paraphrase the old principle of Robbing Peter to Pay Paul, this is more along the lines of Cutting Paul's Taxes But Then Closing His Local Hospital. Tax cuts are all very well, but given the choice, much of the public would rather pay more and maintain decent public services. One can't help but feel this is more an ideologically driven gesture than one that will help in the long run.
Osborne also claims this Budget is aimed at raising growth. That may well be the case at first glance, but considering that the South East is showing signs of recovery while the rest of the country stagnates, it could well mean that we may see growth in the economy overall, but only because already well-off areas are back in bloom, even as public sector job cuts and reduced funding elsewhere take their toll.
Some of the Budget's schemes seem pure legerdemain. Take the proposal to provide interest free loans to first time home buyers. At first it sounds like a great way to kick-start the housing market by allowing new blood to get on the property ladder. Sadly, the fact remains that it's yet another debt for a generation of young people who already have so many, and that's only if they're one of the 'lucky' 10,000 who are eligible.
It's also only for new-build homes, which is to say, it's an indirect government grant for the private sector to build property in a vain attempt to avoid biting the bullet and actually fund an adequate social housing programme.
Or the Council Tax freeze. In effect, this is a government cut by proxy as councils will increasingly have to reduce their services. Taxpayers may in the end wonder if the money saved is worth the facilities lost, and besides this is hardly a new announcement - councils like Barnet have frozen their council tax rates already.
Other proposals seem simply cosmetic. A 1p cut in fuel tax combined with a token new tax on private jets is neither environmentally friendly, nor the answer to our financial woes. An extra £100 million in science research looks impressive, but not when you bear in mind heavy cuts to university funding, where most of the research takes place.
Even the merger of income tax and National Insurance - separated only by a symbolic demarcation, is hardly radical. It will be, of course, red meat for Tory head-bangers who can then claim that tax is too high, and it's time to cut it even more. But still, it's so unimaginative, only Gordon Brown wouldn't have thought of it. The same goes for the 2% rise over inflation on tobacco duty. Taxing captive audiences is hardly brave or radical, but rather exposes the lie that the government really wants us to give up smoking.
In conclusion then, this Budget is more a fig leaf and collection of token gestures from a government so lacking in strategic direction that it is waiting it out in the hope that the economy cures itself. Worse, they've put up the duty on alcohol, and we may well have need of it.
Share with friends
Related Blog Posts
21 Jul 2017Address Your Financial Exigencies in ...
18 Jul 2017How To Earn Extra Income When You Retire
17 Jul 2017Will and Testament in Australia: Can ...